Westmont Hospitality Group, Inc. v. Hank Morris

Citation: Not availableDocket: 07-07-00173-CV

Court: Court of Appeals of Texas; April 14, 2009; Texas; State Appellate Court

Original Court Document: View Document

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Westmont Hospitality Group, Inc. (Westmont) appealed the denial of its bill of review following a default judgment in favor of Hank Morris, which awarded Morris $107,000. The underlying case stems from a 1990 incident where three-year-old Morris was injured by a hypodermic needle at a hotel, raising concerns about potential HIV exposure. Morris filed the lawsuit in October 2005, alleging negligence by Westmont, but issues with service of citation arose. The citation was initially sent to an incorrect address and was later served on the Secretary of State. Westmont claimed it never received notice of the lawsuit due to the incorrect address listed for service of process. After the trial court granted Morris's motion for default judgment on February 21, 2006, Westmont sought a temporary restraining order against enforcement of the judgment, which was granted. However, Westmont's subsequent requests for a temporary injunction and a bill of review were denied by the trial court. The appellate court agreed with Westmont's contention and reversed the trial court's judgment.

Westmont contends that the trial court made several errors: (1) it incorrectly used an informal evidentiary hearing to deny Westmont's bill of review regarding the issue of improper service; (2) it did not provide the required 45 days' notice of trial; (3) it failed to ensure that Morris met all requirements for substituted service on the Secretary of State; (4) it did not adhere to notice and hearing requirements for ordinary hearings; (5) it penalized Westmont by ten percent of the total judgment without evidence that Westmont sought a temporary restraining order solely to cause delay or that such an order harmed Morris; and (6) it imposed this penalty without notice or a hearing, later severing the basis for this penalty from the facts without a proper procedure.

In reviewing the trial court's decision on a bill of review, appellate courts apply an abuse of discretion standard, intervening only if the trial court acted unreasonably or arbitrarily. Courts defer to the trial court's factual findings and do not re-evaluate the facts unless the record does not support those findings. A bill of review is an equitable remedy allowing a party to challenge a judgment that is no longer appealable. To succeed, the complainant must demonstrate a meritorious defense, be prevented from asserting it due to fraud, accident, or official error, and not be guilty of fraud or negligence.

However, plaintiffs alleging non-service are exempt from proving two of these elements: they do not need to show a meritorious defense or that fraud or error prevented them from presenting that defense. They must still prove that the judgment was rendered without any fault or negligence on their part, as someone not served cannot be considered at fault for a default judgment.

The trial judge determined that a default judgment against Westmont was issued on February 21, 2006, based on evidence presented by Morris regarding attempted service of process. Morris made multiple attempts to serve Westmont at its Registered Office and principal office, but no authorized individuals were present to accept service. Additionally, service was attempted through the Texas Secretary of State, which was noted to have an incorrect address for Westmont’s registered agent. Westmont did not provide evidence to contest these facts.

In its appeal, Westmont argued that Morris failed to comply with the necessary requirements for substituted service via the Secretary of State, highlighting that the service was returned as “Not Deliverable As Addressed, Unable To Forward.” Westmont must demonstrate by a preponderance of the evidence that the judgment was rendered without fault on its part. The Texas Business Corporation Act mandates that corporations maintain accurate registered agent information and allows for service through the Secretary of State if the registered agent cannot be located.

Morris’s actions, while compliant with a literal interpretation of the statute, were ineffective due to the incorrect address used. The court noted that presumptions of due service in support of a default judgment require strict compliance with service procedures. In reviewing compliance with the statute, the court considers the record to determine if proper service was achieved and if the pleadings warranted a response from the defendant. In a referenced case, the court upheld a default judgment when proper service at the last known address was attempted, but it was returned undeliverable.

The reviewing court determined that the plaintiff’s pleadings were adequate to necessitate a response, and the service citations, along with the Secretary of State's certification, demonstrated proper service according to article 2.11. It was emphasized that the inadequate service in this case stemmed from the appellant's noncompliance with statutory notice requirements, not from any error by the appellee. However, evidence indicated that Westmont had correctly provided its registered agent's name and address (3555 Timmons Lane, Suite 460, Houston, Texas) to the Secretary of State. The citations, nonetheless, incorrectly listed the address as 3535 Timmons Lane. This error was attributed to Morris, who failed to amend the address despite being informed of the correct one. Consequently, the court concluded that service was improperly executed on Westmont, leading to the determination that the trial court abused its discretion by denying Westmont’s petition for a bill of review. The judgment of the trial court was reversed, and the case was remanded.